Retail sales in the United States unexpectedly declined for the first time in seven months amid uncertainties about the American economy borne of a protracted trade war with China, manufacturing declines and other geopolitical challenges.
According to the Commerce Department, September saw a 0.3% drop in sales to $525.6 billion, following an upwardly revised 0.6% boost from the initial reading of 0.4% in August. It marked the end of a six-month winning streak for the industry, as the trade war and weakness in the manufacturing sector appear to be weighing on consumer spending.
Households cut back on online purchases, department stores and home centers as well as spending at the pump. (Automobiles and gas stations represent a great portion of overall retail sales.) The only division to see solid sales was pharmacies and drug stores.
In contrast, consumer spending during the second quarter rose at a 4.6% annualized rate, representing the strongest surge in four and a half years.
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Businesses are also now shouldering the impact of President Donald Trump’s tariffs on Chinese imports. On Sept. 1, Washington hit Beijing with a 15% levy on $112 billion worth of goods, the first portion of the fourth tranche of tariffs set to be implemented by the United States. Although Trump agreed to hold off on a planned tariff increase on Oct. 15 as part of a “phase one” partial trade deal with China, tariffs on a remaining $188 billion — for a total of $300 billion, representing the complete fourth tranche — are expected to take effect on Dec. 15.
Members of the footwear and apparel industries were displeased with the temporary truce because the scheduled fourth tranche significantly impacts consumer goods when retailers approach the crucial holiday shopping season. “The reality is that everything currently being hit with punitive tariffs is still being charged,” American Apparel and Footwear Association president and CEO Rick Helfenbein said. “The continued costs and uncertainties associated with this tariff policy mean the Grinch still has stolen our Christmas.”
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